JAL’s biggest union to accept benefit cuts

Compiled From Kyodo, Bloomberg

The leadership of the largest labor union of Japan Airlines Corp. plans to accept a company proposal to cut pension benefits substantially to help the ailing airline turn itself around, according to union sources.

The 9,500-strong union, known as JAL Friendship & Improvement Organization, or JALFIO, reached the decision because changing the pension system is “a necessary step” at present, and cuts in benefits would help the recovery of the airline, which is “the source of welfare,” the sources said.

The decision is expected to influence individual union members. Members will still decide for themselves whether to vote for or against the cuts, said Hideshi Takahashi, general secretary of the union.

Earlier this month, two of JAL’s other unions also agreed to pension cuts. The airline has eight unions.

Japan’s top airline, suffering from heavy losses, has sent out letters to its retirees and current workers to seek their approval for cuts to their pension benefits and is expected to receive their replies by Jan. 12.

JAL aims to cut pensions by 50 percent for its 16,000 current employees and 30 percent for its 9,000 retirees as part of cost-cutting plans designed to return the carrier to profit following three losses in four years.